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Columbia County Observer

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Lake City

Blanche Update: Lease Cost Up $1.7 Million, City Manager Johnson, "That's not unusual"

LAKE CITY, FL – On August 7, 2017, City Manager Johnson gave no hint to the City Council or the public that the cost to move City Hall across the street, to a space 2 1/2 times its present space in City Hall, was going to cost an additional $1.7 mil. The next evening, August 8, at the Community Redevelopment Advisory Committee (CRAC) meeting, Mr. Johnson arrived late. CRAC Chairperson, Councilwoman Melinda Moses asked Mr. Johnson for an update. It was then, with no members of the public in attendance, that the City Manager revealed the increased lease cost.

Links to Blanche stories are here.

Forty-six minutes into the meeting, Councilwoman Moses addressed City Manager Johnson, "Now that you're here, do you want to give us a quick Blanche update?"

City Manager Johnson In His Own Words

I would be glad to do that. I've had a number of e-mails today regarding information on the Development Agreement. Certainly, they're in the final stages of the economic factors, all the taxing issues, sales tax issues, property taxes, all those things are really -unintelligible- down absolute details of how that's going to be worded for the final agreement.


   Wendell Johnson

I have a meeting scheduled next Monday between myself and the city attorney, their attorney, vice president and president of the company and Grayson Cason and we're gonna' to be doing a reconciliation of everything that's transpired in the last two months – goin' back and forth with a final agreement -- not just the Development Agreement, but the Lease Agreement and the TIP, which is the Tentative Improvement Plan.

I'm tryin' to make sure that we have everything understood among the staff and the attorney.

(To Ms. Moses, who is not the chairperson of the CRA) Of course you, as CRA Chairman, has [sic] the pleasure to attend that meeting. You will be invited to that meeting -- the only Council member to be there.

Last night of course, the Council voted to have a workshop on the Blanche Development Agreements (Blanche Delayed Again: How Much Is the Move? Councilman Hill Calls for Workshop - Ward Votes No) -- the project itself. And that will be and has been scheduled for September 5, at 5 o'clock p.m. And that will be probably a one hour meeting leading up to the Council meeting...

At this point I'm very -- I won't say concerned, but certainly curious as to the evolution of the agreement. For those of you that don't know, it started initially in September 2015. There's been, as of the final version, the ninth edition of the edited Development Agreement.

Everyone Knows What's Going On Except the Public
Mr. Johnson Continues


Lake City, City Hall: The Observer has been unable to find anyone who can demonstrate that the present 3 story 15,000 sqft City Hall is "inadequate."

When you get a city attorney, you get a corporate attorney from the company, you get a finance attorney, you get a Department of treasury attorney, you get a Department of historical resources attorney -- then you've got the people that are buying the tax credits.

It's just been -- when they initiated this project two years and a half ago, it's been an understatement that this is a very complex project and it's been the most tedious -- it's certainly been frustrating at times for me and people in the community second-guessing, which is clearly justified, because of the time lapse -- curiosity killed the cat. Everybody wants to know what's happening -- what are you doing?

And then you have the speculation of what's happening through word-of-mouth...

Only 1 CRAC Member Asked a Question

I'll be glad to answer any questions?

CRAC member Gloria Spivey asked, "What's caused all the hoopla? Are we from the initial point of what we were gonna' do, down to where we are today, has that really changed that that much for the paper to go the completely the opposite direction?" (The paper is the Columbia County's mainstream media, the Lake City Reporter, an unabashed early supporter of the Blanche project).

Mr. Johnson cut her off, "Let me cut you off. The only change from the September 15 [2015] agreement upon which the Council agreed to, which was based on a letter of intent, the one significant change is that the City Council agreed to relocate City Hall from this building to that building. That's the change. That's the only change thus far.

This was changed because in order for the Developer to make a deal, the City had to guarantee tens of thousands of square feet would be rented in the Blanche)

The Observer has found no one in City government that believes the City is out of space in City Hall or that the City needs to move, other than Council members, Jefferson, Moses, Ward, and Mayor Witt.

Councilman Hill has been against the project from the beginning
.

Mr. Johnson continued, "One other change that happened -- that affected the lease rate is the Tentative Improvement Plan was established in the basic agreement at $100 per square foot. And that's for the space of the City intends to lease -- that we have indicated by Council approval that we will occupy."

"That's $3 million -- was going to be the construction cost to build that location over there -- that foot print -- that space to the needs based on what's here."

"Grayson Cason and I put together a footprint of everything that's in this building and forwarded them -- all the department directors reconciled their office areas with that document. That was the tenant build out plan -- blueprint if you will."

Mr. Johnson continued, "Subsequently, as time went by and we started realizing there's things outside of the basic space requirements that we're gonna' need over there. We're gonna need communications, we gonna' need surveillance equipment, video equipment, communications equipment -- it's a considerable amount of money to put all that stuff in."

It is not clear, how Mr. Johnson, a self-proclaimed economic development expert, overlooked "all that stuff."

Johnson Overlooked $1.7 Million:  "That's not unusual"

Mr. Johnson continued, "So we come back to the table with the project manager and we, the City Staff members, advised them as to what would be required to satisfy the City's additional needs, above and beyond the basic $100 a square foot build out plan."

"That increased the price considerably. And that resulted in an elevation or an increase in the lease rate which was initially $11 triple-net -- it's been increased to $12.41. That in itself is the payback for the additional $1.7 million that's added to the cost of the TIP plan. That's not an unusual, nor an unreasonable request on their behalf, because that was stipulated in the basic agreement to begin with."

Mr. Johnson concluded, "That's been the only changes."

Ms. Moses Recognizes Your Reporter


City Councilwoman Melinda Moses

The Observer: "One question. On September 5, that's the day the final agreements are to go to the City Council?

Mr. Johnson responded, "Yes."

The Observer:  "Will those be available before the workshop?"

Mr. Johnson:  "No. They will not be available before the workshop, unless the City Council decides to give them out, Stew, they are still under the confidentiality arrangement. So when that thing is finalized and the document is submitted, it will be handed out to the Council that night for the workshop and at that time it is subject to release if the Council decides to release it."

Mr. Johnson continued, "But until the Council, and this is something you may have to ask Mr. Koberlein, but until the City Council gives approval and it's accepted by the developer [IDP] -- in other words, it's agreed upon. The confidentiality clause still applies."

The Observer followed up: "So if I have this right. They [City Council] are going to act on it (the agreement) on the 5th, and the public will never have a chance to see what they're going to act on before the meeting?"

Mr. Johnson:  "No. That's the way the confidentiality laws work. If you got any questions, you contact Mr. Koberlein. I'm tellin' you what I've been led to understand... and I've done this a number of times."

A short while later Mr. Johnson said, "I would believe Stew, that at the time that document is presented for consideration to the Council in a workshop, that the staff, the city attorney, which is part of the staff, and their attorney and their principal representative gonna' have agreed to those conditions and terms. What's left remains: is the Council gonna' agree to em'? Until the Council says yes, and everybody signs on the dotted line and says it's done, it's still under confidentiality."

The Observer:  "Thanks for the information."

Epilogue

The Observer has taken the City Manager's advice and contacted City Attorney Koberlein.

It appears that the City did not follow the confidentiality laws regarding its arrangements with IDP.

We are awaiting a response.

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The CRA Master Plan is available here. (25Mb)